Republicans remain eager to pass a massive tax plan, which still doesn’t actually exist. That said, GOP lawmakers continue to consider some provocative ideas to help offset the costs of the package they have in mind.
The New York Times reported the other day, for example, that Republicans are “considering a plan to sharply reduce the amount of income American workers can save in tax-deferred retirement accounts.” According to the lobbyists who are working with GOP lawmakers – Democrats have been excluded from the process – Republicans have weighed capping “the annual amount workers can set aside to as low as $2,400 for 401(k) accounts,” far less than the $18,000 a year most Americans can put in their 401k without paying taxes upfront.
This would only cover about a tenth of the cost of the GOP tax plan, but it’s a start. Or, it might have been a start if Donald Trump hadn’t just rejected the idea in his latest morning tweet. The Washington Post reported:
President Trump vowed on Monday that his tax cuts plan would not include any changes to tax-deferred retirement accounts such as 401(k)s, following reports last week that House Republicans were weighing a sharp reduction in the amount of income American workers could save through such programs.
Trump tweeted Monday morning: “There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!”
I’m going to take a wild guess and say the president didn’t run this by Capitol Hill negotiators before announcing his opposition to the idea.
And while I can appreciate why this may seem like dry policy minutiae, this morning’s developments are actually kind of amazing for a couple of reasons.
First, every time Republicans identify a potential source of new revenue to help offset the costs of the tax breaks – which is to say, every time they try to do the hard part – Trump balks. The initial plan was to help pay for tax cuts through a border-adjustment tax. When the president balked, GOP officials turned to ending deductions on state and local taxes (SALT). When Trump rejected that, Republicans explored capping contributions to 401k accounts.
And the president isn’t going for that, either. It’s hard not to get the impression that Trump doesn’t fully understand the nature of trade-offs in policymaking.
Second, have you noticed just how frequently the president has recoiled after hearing some of the details of the proposals he ostensibly supports? It happened during the health care fight; we saw another example of this on immigration; and it’s happened more than once during the fight over taxes.
As Vox’s Ezra Klein recently noted, “It is one of the darker comedies of this administration that Trump keeps getting angry when he hears what the policies he supports will actually do.”